VANCOUVER, Feb 28 (Reuters) - U.S. environmental regulators moved on Friday to block development of the Pebble mine in Alaska, which could be one of the largest copper projects in the world, citing potential "irreversible harm" to the state's salmon fishery.

The Environmental Protection Agency (EPA) said it has initiated a rarely used process under the Clean Water Act to "identify appropriate options to protect" the Bristol Bay fishery from the impact of the proposed mine.

The decision follows a report in January that found large-scale mining would pose serious risks to salmon and native cultures in the pristine corner of southwest Alaska.

"Extensive scientific study has given us ample reason to believe that the Pebble mine would likely have significant and irreversible negative impacts on the Bristol Bay watershed and its abundant salmon fisheries," EPA administrator Gina McCarthy said in a statement.

"This process is not something the agency does very often, but Bristol Bay is an extraordinary and unique resource."

Shares of Northern Dynasty Minerals Ltd, which owns the Pebble project, plunged 29 percent to close at C$1.17 on the Toronto Stock Exchange on Friday. The stock has fallen more than 64 percent in the last 12 months.

The Vancouver-based company was swift to condemn the EPA's action, saying the agency is looking to preemptively block the project without allowing it to go through the established permitting and environmental review process.

"What the EPA is trying to do is short-circuit that process," said Tom Collier, chief executive of the Pebble Limited Partnership, a Northern Dynasty subsidiary. "That's just a huge mistake. That's not the way America works."

Northern Dynasty said it remains confident that Pebble, one of the richest copper-gold deposits in the world, will eventually move ahead. It has said the mine can be developed in a safe manner and would provide an economic boom for Alaska.

Indeed, the company expects to employ about 2,500 people through the construction phase and then about 1,000 throughout the mine's operating life, and filter hundreds of millions in tax dollars to federal, state and regional governments each year.

Opponents have long said the environmental risks outweigh the benefits, citing the potential for widespread damage if polluted water were to enter streams in the region.

The EPA can use the Clean Water Act to effectively veto the mine. It has initiated similar processes just 29 times and completed the entire process only 13 times. The review will include a new consultation period, public hearings and further consultations with the Army Corps of Engineers and the company.

Permits cannot be approved during the review process.

The Pebble project is located some 200 miles (320 km) southwest of Anchorage, in a region of Alaska that produces nearly 50 percent of the world's wild sockeye salmon. The area also has a booming sport fishing and tourism industry.

Northern Dynasty lost its project development partner last September when mining group Anglo American pulled out of the venture.